Friday, July 06, 2012

Unemployment in the European Union hit a record high in May. According
to data provided by Eurostat, the unemployment rate in the 17 EU
economies hit 11.1%, up from 10% the year before. There are now a
quarter of a million more unemployed people in Europe than there were a
year ago. During that period, the unemployment rate in those countries
for those 25 and younger jumped from 20.5% to an unbelievable 22.6%.
Meanwhile, in the United States, the youth unemployment actually fell
from 17.2% to 16.1%.

Despite the improvement in the U.S., the worsening trend of
unemployed young people highlights the severity of the issues facing
many of Europe’s major economies. 24/7 Wall St. reviewed the 29 nations
included in the report (most of which are in Europe, but they also
include the U.S. and Japan) and identified the 10 nations with the
highest unemployment rates among those 16 to 25.

With a few exceptions, most of these countries have been hit hardest
by the recession. The so-called PIIGS countries of Portugal, Ireland,
Italy, Greece and Spain — infamous for their contribution to the
European sovereign debt crisis — are on the list. The remainder are not
as infamous but nonetheless have been hit harder than the rest of the
developed world.

Some of the countries with the highest youth unemployment rates —
which in several cases exceed 50% — also have some of the highest
overall unemployment rates as well. Spain, which tied with Greece for
the highest youth unemployment rate (52.1%), also had the highest total
unemployment rate of the 32 countries examined. All of the other
countries on our list for which data is available had among the top 10
overall unemployment rates in May.

As evidence of the level of fiscal difficulty some of these
governments are in, their sovereign credit ratings are among the worst
in Europe. Nine of the 15 with the worst youth unemployment rates have a
Baa3 rating or worse. Ireland and Portugal both have Ba ratings, while
Greece is the only country in Europe with a C, or junk, rating.
Countries with the lowest youth unemployment rates are almost without
exception rated well by Moody’s. Only one of the 15 countries with the
lowest rates has a worse rating than A1.

The countries with this severe unemployment also experienced the
worst GDP contractions the European Union has seen in its brief history.
In 2009, the gross domestic product of nearly every country in Europe
(as well as Japan and the U.S.) fell. Latvia and Lithuania, which have
two of the highest youth unemployment rates, had the highest single-year
contractions in the EU in recent history, at 14.7% and 18%,
respectively. In 2010, the most recent year of data, most of these
economies bounced back, with the exception of five, which continued to
contract. These five — Lithuania, Greece, Croatia, Spain and Ireland —
are all on this list.

Using unemployment data published by Eurostat, which records data for
sovereign European nations, the U.S. and Japan, 24/7 Wall St.
identified 10 countries where young people cannot find a job. Eurostat
defines unemployed persons as being aged 16 to 74, without work, able to
start within two weeks, and having actively sought work in the past
four weeks. Youth unemployment rates specify a narrower age range of 16
to 25. GDP data, including annual growth rates, come from the World
Bank, which uses current U.S. dollars. 24/7 Wall St. also consulted
Moody’s Investor Service’s sovereign credit ratings.
These are the countries where young people cannot find a job

10. Lithuania

> Youth unemployment rate: 27.7%
> Overall unemployment rate: 13.7%
> GDP in 2010: $36.3 billion
> GDP growth in 2010: 1.33%
> Moody’s credit rating: Baa1
In May, Lithuania’s unemployment rate for those under 25 was 27.7% —
more than double the country’s unemployment rate for its total
workforce. The country’s economy was hit particularly hard
during the 2008 financial crisis. GDP fell from $47.25 billion that
year to $36.85 billion in 2009. The levels of central government debt
also have risen considerably in recent years, from just 18.36% of GDP in
2008 to 43.16% in 2010. But the Lithuanian economy began recovering in
2010, with GDP rising 5.8% in 2011, according to the CIA. As the economy
grew, so have job opportunities for the youth. And although youth
unemployment rate is still high, it is down from the January rate of
31.7%.

9. Latvia

> Youth unemployment rate: 28.1% (Q1)
> Overall unemployment rate: 15.3% (Q1)
> GDP in 2010: $24 billion
> GDP growth in 2010: -0.34%
> Moody’s credit rating: Baa3
Like Lithuania, Latvia is a former Soviet state
with a small economy that was heavily impacted by the financial crisis.
In 2008, the total unemployment rate was 8%, while the youth
unemployment rate was 14.5%. By 2009, overall unemployment rate had
risen to 18.2%, while youth unemployment rate had jumped to 36.2%. The
small nation pegs its currency to the euro and hopes to join the
eurozone in 2014. Latvia’s youth unemployment rate has fallen from a
high of 37.2% in 2010, while in the eurozone the unemployment rate for
those under 25 has risen from 20.9% in 2010 to 22.6% in May.

8. Ireland
> Youth unemployment rate: 28.5%
> Overall unemployment rate: 14.6%
> GDP in 2010: $206.61 billion
> GDP growth in 2010: -0.43%
> Moody’s credit rating: Ba1
Ireland’s youth unemployment rate remained between 8.4% and 8.9% from
2002 to 2007. But beginning in 2008, youth unemployment skyrocketed,
eventually reaching a high of 31.1% in January 2012. However, following a
period from 2007 to 2009 when GDP declined from $260 billion to $223
billion, and central government debt rose from 28.37% to 70.48% of GDP,
the situation in Ireland has been slow to improve. Up to 100,000 young people
have emigrated from Ireland since the start of the recession,
suggesting the youth unemployment rate in the country possibly
understates the actual rate. Since July 2009, Moody’s Investor Services
has downgraded Ireland’s credit rating five times, from Aaa to Ba1.

7. Bulgaria

> Youth unemployment rate: 29.2%
> Overall unemployment rate: 12.2%
> GDP in 2010: $47.71 billion
> GDP growth in 2010: 0.2%
> Moody’s credit rating: Baa2
Bulgaria’s youth employment rate has worsened considerably in recent
years, rising from 15.1% in 2009 to 29.2% this past May. This was
coupled with a stagnation in GDP. After a 5.5% contraction in GDP in
2009, the Bulgarian economy grew just 0.2% in 2010, and it is forecast
to grow an anemic 0.6% in 2012, according to the World Bank. In its
annual credit report on Bulgaria, Moody’s Investor Services
cites corruption and poor expansion in industrial output as potential
concerns for the Bulgarian government. According to the Sophia Globe,
just 673 internships were offered to young unemployed Bulgarians, a
number that is actually double April’s tally.

6. Italy
> Youth unemployment rate: 36.2%
> Overall unemployment rate: 10.1%
> GDP in 2010: $2.06 trillion
> GDP growth in 2010: 1.54%
> Moody’s credit rating: A3
Since 2000, the youth unemployment rate in Italy consistently has
been double that of the general population. By May 2012, Italy’s youth
unemployment rate was well more than triple that of the general
population. In fact, the current unemployment rates for both the total
workforce and those under 25 are the worst registered in Italy in more
than a decade. On July 2, the Italian General Confederation of Labour,
Italy’s largest trade union, declared that youth unemployment in the
country is a “dramatic national emergency.”

5. Portugal

> Youth unemployment rate: 36.4%
> Overall unemployment rate: 15.2%
> GDP in 2010: $228.57 billion
> GDP growth in 2010: 1.38%
> Moody’s credit rating: Ba3
Portugal’s unemployment rate has increased from 14.7% in January to
15.2% in May 2012. This trend is far more exacerbated among Portuguese
youth. In 2000, youth unemployment rate in Portugal was just 10.5%, but
has risen consistently since. This year, the country’s monthly youth
unemployment rate has frequently exceeded 35%. Portugal has emerged as
one of the areas of greatest concernin the European sovereign debt
crisis, its credit rating from Moody’s having been downgraded five
timesin the past three years. In order to combat its rising youth
unemployment, Portugal promised to reimburse companies for up to 90% of
social security contributions made for workers between the ages of 16
and 30 if they had previously been unemployed for more than four months.

4. Slovakia
> Youth unemployment rate: 38.8%
> Overall unemployment rate: 13.6%
> GDP in 2010: $87.27 billion
> GDP growth in 2010: 4.24%
> Moody’s credit rating: A2
In recent years, Slovakia featured among the highest unemployment
rates in all of the European Union. Yet, like many other European
countries, unemployment in Slovakia has risen dramatically in recent
years, reaching a post-financial crisis peak of 14.5% in 2010. Though
the total unemployment rate declined shortly thereafter, the youth
unemployment rate has continued to rise. In April, youth unemployment
rate jumped to 39.7% from 34.5% the month before. Slovakia’s new prime
minister, Robert Fico, is reportedly considering constructing public housing facilities and providing subsidies in order to reduce youth unemployment.

3. Croatia
> Youth unemployment rate: 41.6%
> Overall unemployment rate: 15.8%
> GDP in 2010: $60.85 billion
> GDP growth in 2010: -1.19%
> Moody’s credit rating: Baa3
Although unemployment rose considerably following the financial
crisis, young Croatian workers have had a particularly difficult time.
Since 2008, Croatia’s youth unemployment rate has nearly doubled from
21.9% in 2008 to 41.6% in May. The former Yugoslav nation’s GDP fell by
5.99% in 2009 and by 1.19% 2010, and problems still persist. In late
2011, the World Bank announced Croatia was likely to reenter a
recession, and early indications suggest the economy is once again
contracting. This probably will exacerbate unemployment concerns for
both the general population and young Croatians alike.

1. Greece (tie)
> Youth unemployment rate: 52.1% (March 2012)
> Overall unemployment rate: 21.9% (March 2012)
> GDP in 2010: $301 billion
> GDP growth in 2010: -3.52%
> Moody’s credit rating: C
As Europe’s sovereign debt crisis has unfolded, Greece was revealed
as one of the countries with the worst problems. The country’s overall
unemployment rate increased from 7.7% in 2008 to 21.9% in March 2012.
Since December 2009, Moody’s has downgraded Greece’s sovereign credit
rating seven times, from A1 to C. In 2009, central government debt
reached 141.97% of GDP, while GDP fell by 3.25% — before falling again
by 3.52% in 2010. This has severely affected Greece’s youngest workers,
52.1% of whom were unemployed as of March. In Greece’s June national
election, much of the youth vote flocked to SYRIZA, a leftist and antiausterity party promising to deal with the youth unemployment.

1. Spain (tie)

> Youth unemployment rate: 52.1%
> Overall unemployment rate: 24.6%
> GDP in 2010: $1.4 trillion
> GDP growth in 2010: -0.14%
> Moody’s credit rating: Baa3
Since 2010, Spain has maintained the highest overall unemployment
rate of all countries surveyed. In May 2012, the country’s youth
unemployment rate caught up to that of Greece’s 52.1%, the highest rate
in the study. Recent indicators suggest increasing economic weakness in
Spain: the Markit Spain Manufacturing PMI, which tracks manufacturing
growth, registered the lowest score in 37 months and the
fifth-consecutive negative month. On June 13, rating agency Moody’s
downgraded Spanish government debt from A3 to Baa3, and placed it on review for future downgrades. The effect of all this is a generation that, despite being well educated, has nowhere to work and lives with parents longer than ever.